Composite Leading Indicators Suggest Stable Growth In The OECD

The OECD Composite Leading Indicators (CLIs) continue to suggest stable growth momentum in the OECD. CLIs are designed to anticipate turning points in economic activity relative to trend.

The US, Canada and the UK CLIs show stable growth momentum and in the UK growth is stabilising at rates above the trend. The CLI for Japan shows an interruption in the growth momentum although it is probably only a temporary effect. The CLIs for the euro area as a whole and for Italy in particular indicate a positive change in momentum. Germany may be losing some of its momentum but it is at a high level.

In the BRICS emerging economies, Brazil's CLI points to below trend growth, China and Russia are growing around the trend and India may be returning to faster growth with a CLI suggesting a positive turning point.

International Merchandise Trade Slow Again

Most of the major economies experienced a continuation of the slowdown in merchandise trade seen in the second quarter in the third quarter of 2012 according to data from the OECD. Imports and exports fell in Brazil, Germany, Italy, Japan, Russia, S.Africa and the US. Imports also decreased in France and the UK. Moderate export growth occurred in France and the UK. Exports fell in Canada, China and India. Imports grew moderately in Canada and China but there was stronger growth in India.

Signs Of Weak Growth Prospects In OECD CLI's

The composite leading indicators of the OECD suggest there may be weak growth prospects in major economies. The CLIs for Japan, Germany, France and the Euro Area pont to weak growth but there are signs of stabilisation in other economies such as Canada, China and the US and possibly Italy as well. Weak growth signs also appear in India and Russia.

Deceleration In World Trade Expected

World trade expanded by 5% in 2011 but it was a sharp deceleration after the 13.8% rebound in 2010. Growth is expected to slow even more in 2012 to 3.7% below the 5.4% 20-year average according to the WTO. The slowdown was attributed to a number of shocks including the European sovereign debt crisis, Japanese tsunami and Thai floods hitting production in Japan and China.

Developed economies with export growth of 4.7% did better than expected but developing economies did worse than expected with an increase of 5.4% (developing economies include CIS and China). Developing economies were disproportionately affected by the Japanese earthquake and tsunami, the Thai floods and the disruption in oil supplies from Libya.

The rate of world output growth fell to 2.4% in 2011, down from 3.8% in 2010. The European sovereign debt crisis was the biggest problem along with the supply chain disruption from the natural disasters in Asia and the turmoil of the Arab Spring. Expansion was below the 3.8% 20-year average. The fastest growing economies in 2011 were China with 9.2% then the Middle East with 4.9%, CIS 4.6%, South and Central America 4.5%. The slowest included Japan with -0.5%, US with 1.7% and the EU with 1.5% growth.

Countries with the fastest growing trade volumes included India on 16.1% growth, China with 9.2% and the US with 7.2%. Africa had the biggest decline in exports with a decrease of 8.3%, Japan decreased by 0.5% and the Philippines exports declined 14.3%. China and India had the fastest growing imports with 9.7% and 6.6% respectively. Greece and Chinese Taipei had the most serious decline in imports with -20% and -3% respectively.

There were significant appreciation of the Japanese yen and the Swiss franc against the US dollar in 2011. The yen went up by 10% year-on-year and the franc by 17%. The Swiss National Bank had to intervene in currency markets to keep the value of the currency down against the euro. The IMF real exchange rates show the US dollar's depreciation was stronger in real effective terms at -4.9% and that the average appreciation of other currencies was overstated. The yen only appreciated 1.7%, the yuan (China) rose 2.7%, the Brazilian real stronger at 4.7% and the euro with a rise of 1.8% was quite small.

China was the world's biggest exporter with the USA second biggest, Germany third and Japan fourth. The USA was the world's biggest importer, China second, Germany third and Japan fourth. The Uk was the 11th biggest exporter after Belgium and the 6th biggest importer after France. The UK was second biggest exporter of commercial service after the US and the fourth biggest importer after the US, Germany and China.

OECD Leading Indicators Suggest A Potential Turning Point

Composite leading indicators from the OECD, designed to anticipate economic turning points relative to trend, show signs of regained momentum in economic activity in Japan and the United States. The Euro Area also shows signs of a potential turning point. The major European economies have, however, diverging assessments. The emerging BRICS economies show stronger positive signals than the last assessment.

OECD GDP Growth Slows But Stays Positive

Real GDP growth in the OECD countries slowed down to 0.2% in Q4 2011 compared to 0.6% growth in Q3. The major components were all included except for changes in inventories. There was slower growth in private consumption, investment and net exports but they remained positive. Government consumption was the main contributor to the slowdown decreasing growth by 0.1%.

The broad based slowdown in demand differed at national level reflecting amongst other things differences in rates of economic growth. GDP growth was strongest in the US at 0.7% largely due to private consumption. Private consumption was also the main driver in Canada which showed growth on 0.4%. France remained positive at 0.2%. Japan and Germany both reported negative growth of 0.2%. Other countries with negative GDP growth in Q4 2011 included Italy -0.7% and the UK with 0.3%

Inflation In The OECD Continues To Rise In September

Consumer prices in the OECD countries continued to rise in September by 3.3% after a 3.2% increase in August. It is the highest rate since October 2008. The 5.2% rise in inflation in the UK in September was mainly due to the 18.1% rise in energy prices in September after a 12.3% rise in August. It is back to the peak of September 2008, the highest since records began in January 1997. Consumer price inflation also increased in Italy (3%), Germany (2.6%), the US (3.9%) and Canada (3.2%). In France prices remained stable but in Japan prices fell by 0.2% to 0%. In Europe, the HICP increased to 3%.

Falls In UK Productivity Levels

Productivity per worker in the UK fell relative to all G7 countries except Italy and Germany in 2010, but it was above that of Japan and similar to Canada. The productivity gap between the UK and the US is the biggest since 1994. All G7 countries have seen an increase in GDP per worker and GDP per hour between 2009 and 2010. UK productivity was lower than the G7 average on both measures. GDP per worker was lower than in France, Italy and the US (the highest in G7).

All G7 countries experienced productivity growth in GDP per hour worked in 2010. In the UK growth was the result of a combination of a fall in actual hours worked and an increase in GDP. While the UK experienced a fall in hours worked per worker between 2009 and 2010 other countries saw a reduction in total hours as a result of lower employment.

The US saw the largest growth in GDP per worker of the G7 countries. The UK previously a fast growth country saw falls similar to those in Canada, France and Germany due to employment falling more slowly than GDP.

Euro Area Trade In Balance

The first estimate from Eurostat for euro area trade with the rest of the world in May 2011 was in balance. There was a deficit of 4.9bn euros for the same period last year. In April 2011 the deficit was 4.8bn euros. The EU27 is estimated to have had a deficit of 13.2bn euros in May 2011 compared with -16bn euros in May 2010. The April balance was a 16.4bn euros deficit in 2011 compared with 12bn euros deficit in 2010. The euro area's main trading partners between January and April 2011 in euro terms were the United States, United Kingdom and China. Russia saw a 33% growth in imports from EU17. The main trading partners with the EU27 were the United States and China.

OECD Inflation Continues to Increase

Consumer prices indices for the OECD countries continue to increase. The OECD CPI went up by 2.9% in April 2011 compared with 2.7% in March. Energy prices accounted for much of the increase with a 13.8% rise compared with 12.4% in March.

Inflation accelerated most in the UK with an increase to 4.5% and the US to 3.2%. Germany also experienced an acceleration of inflation to 2.4%. France's inflation rose to 2.1% and Italy's to 2.6%. Canada remained stable at 3.3%. The euro area inflation (HICP) was at 2.8% in May from 2.7% in April.

The latest figures from Eurostat suggest that euro area inflation was back to 2.7% again in May with EU inflation at 3.2%.

OECD CLI Suggest Slow Down In Recovery

The Composite Leading Indicators (CLIs) published by the OECD for April 2011 suggest a slight loss of momentum in most major economies with the US the exception. Stability in the pace of expansion was suggested in Germany and the UK but France, Italy and Canada show signs of a slowdown. Signs of a slowdown also appear in China, Brazil, India and Russia.

OECD CLIs Show Signs Of Expansion

The composite leading indicators of the OECD countries for February 2011 signify continued expansion in the economies of most member countries. The OECD area annual growth rate was 1.8% compared with the Euro area 1%. The trend of expansion is continuing in Germany and the United States. The rate of expansion seems to be slower but stable in the UK. France and Canada are possibly regaining momentum but Italy may be losing momentum.

Russia seems to be continuing its current economic expansion phase while China shows signs of more moderate economic activity. India is pointing towards a slowdown but Brazil should remain near its long-term potential. The Major 5 Asian economies grew by 0.2% over the last year and the Major 7 by 2.1%.

CLI Shows Signs Of A Peak In US Economy

The OECD composite leading indicators for August suggest that economic expansion is continuing to slow down. The CLI decreased by 0.1 point in August for the fourth month in a row. A downturn is expected in Canada, France, UK, Italy, Brazil, India and China. Expansion is indicated for Germany, Japan and Russia. The US is showing signs of a peak in economic activity.

OECD Unemployment Fell In August

The unemployment rate in the OECD countries fell by 8.5% in August from 8.6% in July. Unemployment appears to be stable across OECD countries. In the US unemployment remained the same as last month and it fell in Canada. It is still near its highest post-war levels.

OECD GDP Expands By 2.8%

GDP growth in the OECD increased by 0.7% in Q2 2010 as it did during the first quarter. Real GDP grew by 1% in the euro area and the EU driven by record growth of 2.2% in Germany. It is the highest rate since reunification. The UK saw growth of 1.1% from 0.3%, France 0.6% from 0.2% and Italy unchanged at 0.4%. Growth slowed in the US and Japan with growth figures of 0.1% and 0.6% respectively from 1.1% and 0.9% in the first quarter. GDP in the OECD area expanded by 2.8% from 2.4% on the previous quarter. The highest rate was in Germany with 3.7% and the lowest was Italy with 1.1%.

Expansion Slowdown Expected To Continue

The slowdown in economic expansion is set to continue according to the OECD Composite Leading Indicators for May 2010. The deceleration continued into the 10th month with an increase of 0.1% point.

France, Italy, China and India seem to have reached a peak in the growth cycle and signs of a peak are emerging in Canada the UK and Brazil. Ongoing expansion is still taking place in Germany, Japan, the US and Russia but at a slower pace. The ASEAN coutries are generally gaining momentum of recovery.

GDP Up 0.2% In Europe

EU GDP increased by 0.2% during the first quarter of 2010 according to a news release from Eurostat. GDP in both the euro area and the EU27 rose by the same amount in the quarter according to these second estimates.

These figures compare with the 0.1% and 0.2% growth in GDP in the euro area and the EU27 rspectively in the last quarter of 2009. In comparison with the first quarter of 2009 GDP rose by 0.6% in the euro area and by 0.5% in the EU27 after falling by 2.1% and 2.3% respectively in the previous quarter.

The Member States which data are available show that Ireland recorded the highest GDP growth with 2.7%, then Sweden with 1.4% and Portugal with 1.1% growth on the previous quarter. Comparing the same quarter of the previous year, Slovakia recorded the highest GDP growth with 4.5%. GDP in the US grew by 0.7% and Japan by 1.2% in the first quarter 2010. When compared with the same quarter last year the US GDP has grown by 2.4% and Japan's GDP by 4.2%.

Among the various components of GDP household final consumption expenditure decreased by 0.1% in the euro area and the EU27. Investments fell by 1.2% in the euro area and by 0.3% in the EU27. Exports increased by 2.1% in the euro area and by 2% in the EU27 and imports rose by 3.8% and 3.4% respectively.

Unemployment In Europe Stays At 10%

Unemployment in the euro area in May was unchanged at 10%, in EU27 it was also unchanged at 9.6% compared with April 2010. In May 2009 it was 9.4% and 8.9% respectively according to Eurostat.

The seasonally-adjusted percentage changes equate to 23,127 million unemployed people in the EU27 and 15,789 million unemployed people in the euro area. The number of people unemployed in the euro area increased by 35,000 compared with the previous month and decreased by 37,000 in the EU27. Compared with May 2009 the number had increased by 1.801 million people in EU27 and by 0.991 million people in the euro area.

There was a fall in unemployment in 5 Member States and an increase in unemployment in 22. These figures compare with unemployment in the US in May 2010 at 9.7% and in Japan at 5.2%.

Slower Rate Of Expansion May Continue

The OECD Composite Leading Indicators for April suggest that there is a slowing down of expansion in most OECD countries. The OECD area CLI increased by 0.4 to in April 2010, following from the 0.5 in March. The increase has slowed now for the nine consecutive months.

The growth cycle outlook suggests that potential peaks have appeared in Brazil and in China, France and Italy. The Major Five Asian economies (China, India, Indonesia, Japan and Korea) also display signs of a potential peak. The continuity is also there in Japan, US and Germany and is expected to be maintained though at a slower pace. Brazil's recent peaks were in October 2004 and May 2008 the most recent trough was in April 2009. The most recent trough in China was in February 2009 and their most recent peak was in December 2007.

GDP Rose 0.2% In Europe In First Quarter

GDP rose by 0.2% in Q1 2010 compared with the previous quarter in both the euro area and the EU27 according to Eurostat. Compared with the same quarter in the previous year GDP increased by 0.5% in the euro area and by 0.3% in the EU27.

US GDP rose 0.8% Q1 2010 on Q4 2009 and by 2.5% in Q1 2010 on Q1 2009. In EU27, Slovakia's GDP rose by 4.6% and Latvia's fell by 5.1%. In the euro area, Germany's GDP rose by 1.5% and Greece's fell by 2.3%.